Airline stocks reverse, capture gains at close

Southwest shares close higher after company details plans to boost profit

By

LauraMandaro

SAN FRANCISCO (MarketWatch) -- Airline shares ricocheted along with the broader market Wednesday to close with modest gains, while Southwest Airlines unveiled plans to jumpstart the company's profit growth.

The Amex Airline Index
closed 0.5% higher at 49.1 points after falling as much as 0.8% in earlier trading. The Dow Jones Wilshire Airlines Index, which includes more stocks, ended the day with a 0.3% gain at 1,207.81 points.

Among the winners for the day was discount carrier Southwest Airlines Co.
ORCL, -0.92%
Its shares closed 1.3% higher after CEO Gary Kelly told investors the company plans to slow its available seat mile growth to about 6% and cut unprofitable flights, among other tactics. It's also placing more attention on courting business travelers. See related story.

"In this economic environment, we simply need to take less risk and grow more slowly," Kelly said in a statement.

Northwest Airlines Corp.
LUV, +0.52%
led decliners with a 4.2% drop, followed by a 2.1% loss in the shares of Frontier Airlines Holding Inc.
FRNT

A small recovery in the airline sector came despite a rebound in crude oil prices. Crude for August delivery gained 1.8%, or $1.20, to close at $68.97 on the New York Mercantile Exchange. The contract recouped nearly all of the $1.41 loss it saw Tuesday when pressured by the end of a labor strike in Nigeria over the weekend as well as expectations for higher U.S. petroleum supplies. See Futures Movers.

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